The Securities and Exchange Commission (SEC) says it is reviewing unit and mutual trust fund regulations to allow fund managers invest more than 10 percent of their funds in the real-estate sector.
The current housing deficit in the country is estimated at 1.7 million units, with an annual growth of 70,000 units. About 50% of Ghanaians are also said to live in sub-standard housing and other unsuitable structures.
Mr. Alexander Williams, the Deputy Director General of SEC who was speaking at the official inauguration of Greenfields Estates developed by ASN Holdings, said the initiative points to the commitment of SEC in partnering real-estate developers to meet their objective of providing housing units with long-term funds -- while at the same time developing the capital market.
“SEC is changing the current laws of the securities industry. Under the unit trust funds and mutual funds regulations, collective schemes cannot hold more than 10% of the value of funds under management in the real-estate sector. When the law is amended, there will be no ceiling as to how much a fund manager can use to promote the real-estate business,” he said.
Growth in construction Gross Domestic Product (GDP) has averaged 17 percent per annum since the country’s discovery of oil in 2007. The share of construction, including real-estate, in GDP also rose from 7.2 percent in 2007 to 10.5 percent in 2012.
It is believed that an amendment of the law would allow capital market investors to benefit from the booming construction sector.
“[Bonds and equity] are long-term funds used for long-term business such as housing. It offers stability as against bank loans. Equity also gives constant income flow,” Mr. Williams said.
“For the small- and medium-scale entities, we propose the Ghana Alternative Exchange (GAX). The commission is also developing the real-estate investment fund to provide liquidity for investors who wish to exit at any time,” he added.
The GAX is a new market operated by the GSE with a focus on small businesses with high potential for growth. GAX-listed companies will enjoy incentives, including pre-Initial Public Offer (IPO) financing.
The GSE, touted to be one of the best-performing stock markets in Africa, has long been faced with liquidity challenges despite experiencing a bullish run in the last two years -- as a result of the stellar operating performances of some listed companies.
The encouraging performance of listed companies last year has pushed some of them to heed the GSE’s call to issue additional shares.
ASN Holdings’ Greenfields is a gated community of two- and three-bedroom houses located at Oyibi, a suburb of Accra. The company officially inaugurated 200 two-bedroom houses last week, with an additional 200 three-bedroom units due to be completed in the next two months.
The Chief Executive Officer of the company, Mr. Prince Sarpong, said the company’s Greenfield development is to help reduce the housing deficit in the country.
